Ayala v. Berryhill

Background

Leticia Ayala brought a Social Security appeal. The parties previously stipulated—that is, agreed—to remand the case to the Social Security Administration for further proceedings. On remand, Ayala received an award of past-due benefits.

The Commissioner withheld 25 percent of the retroactive benefits, or $16,089.38, for a potential attorney’s-fee award. Ayala’s fee agreement with her lawyer provided for a 25-percent contingency fee based on the award. The lawyer had already received $3,621.60 under the Equal Access to Justice Act, and agreed to refund those fees if awarded fees under 42 U.S.C. § 406(b). The Commissioner stated that he had no objection to the request.

Legal Standard

Under 42 U.S.C. § 406(b), a court may approve a reasonable fee for a claimant’s lawyer when the court has issued a judgment favorable to the claimant. The fee may not exceed 25 percent of the claimant’s past-due benefits. This authority can apply when the court remands the case and the claimant later receives past-due benefits from the agency.

The court must independently review a contingency-fee request to determine whether it produces a reasonable result. Relevant considerations include the quality of the representation, the results achieved, any attorney-caused delay, whether the benefits are disproportionate to the time spent on the case, and the risk counsel accepted. A fee awarded under § 406(b) must also be offset by fees previously awarded under the Equal Access to Justice Act.

Ruling

The court found that the 25-percent fee agreement complied with the statutory limit and that the requested $16,089.38 fee was reasonable. The court granted the plaintiff’s counsel’s motion for attorney’s fees and ordered counsel to refund the $3,621.60 in earlier Equal Access to Justice Act fees to Ayala. The resulting net fee award was $12,467.78.